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Inside Radio, InsideRadio.com Monday, Nov 28, 2016 11:21 AM EST

Broadcasters Ponder Right Way to Monetize Digital

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Ad dollars flow to digital media, and the question for each invested radio broadcaster is: How do you increase your cut? With digital streaming’s versatility, stations have put plenty of strategies in place. Among them: pondering ad loads/sponsored content, creating separate digital sales teams and tapping into the power of smart, in-demand data.

As radio executives examine streaming traffic, they see digital listening now representing a significant portion of tune-in. At Entercom Communications, some stations see streaming account for 35%-45% of total listening, according to VP of Digital Strategy Tim Murphy. Streaming, he says, “is hugely additive and, at many times, we’re winning ratings wars because of it.”

Murphy adds: “For some of our audience, including younger audiences, who are making the decision for how and when they listen, streaming makes more sense than using a broadcast tuner.”

Converting on that listening, however, is a bit more challenging. Nielsen rules dictate that a station can bundle its streaming ratings into broadcast ratings if it runs a complete simulcast, including spots, inside the Designated Market Area. For out-of-market audiences, stations can insert national ads, which deliver some incremental revenue and also improves the listening experience—a listener in Miami streaming a New York station wouldn’t want that station’s local ads.

To boost revenue, some industry executives say Nielsen should revise its policy and only require simulcasting on a Metro Survey Area basis. Doing so would create “a significant amount of new inventory that could be separately monetized and create new revenue for radio,” says Triton Digital president of Market Development John Rosso.

When Emmis Communications first launched its hip-hop-themed app “Where Hip Hop Lives,” which includes its streams for “Hot 97” WQHT New York, “Power 106” KPWR Los Angeles and two digital-only channels, the company experimented with a domestic subscription plan for commercial-free listening, much like the pureplays. They’ve since abandoned that, opting for the widest possible audience with ad-supported, free content. “There are a million ways to get audio these days. Putting behind that velvet rope for domestic didn’t [seem to work]. This is about a celebration of a culture and hip-hop. To say you have to spend money didn’t make sense,” says Trinity Brocato, Emmis Digital’s director of Mobile Innovation.

To generate revenue, “We will use sponsorships, custom-branded content and playlists, and spot replacement. Whatever we need to do,” Brocato says.

In a dramatic shake-up of the current model, Triton Digital’s Rosso says a radio cluster could separate out its streaming traffic entirely and bundle it into one cluster-wide digital streaming ad package. For a strong cluster, he says this could equal the same ratings as a competitive radio station, adding significant valuable inventory for a radio sales team to bring to market.

Broadcasters may also want to reconsider their digital streaming commercial load. Pureplay services such as Pandora and Spotify, direct competitors for local digital audio dollars, run less than three minutes per hour of ads, while a broadcast simulcast could have 12 minutes per hour, mirroring the on-air station. Reducing spot load will improve the listener experience, but stations would need to fill that extra time. Industry execs say sponsored content or talent endorsements are possible ways, along with short original programming segments.

To effectively sell digital audio, Jacobs Media general manager Paul Jacobs says radio stations need to shake up their perspective with such ideas. “It is time to look at digital as a real business,” he says.

Jacobs Media recently sent an advisory to its station clients, citing BIA/Kelsey numbers that show terrestrial radio claiming 9.6% of local ad dollars next year, while radio digital receives 0.9%. In contrast, online local media is expected to receive 12.5% of local ad spend and newspapers’ online platforms will attract 2.5%.

“If you really want to succeed, you almost need separate people thinking about unique solutions and unique content. They are of that culture and speak that language,” Jacobs says.

Part of that digital language involves data. Advertisers and media buyers are conditioned to use data to target digital buys and analyze returns. Radio stations have the opportunity to collect and share data on their digital listeners but at many groups, these efforts are only now beginning. Wide Orbit’s senior director of product management Jim Kott says radio stations need to focus on generating “smart impressions,” where they collect first-party data on age, gender and mobile ID. Then “they can take advantage of advertisers who want to target by age and gender, not blindly,” he says. While most audio players and apps allow for such collection, Kott says most broadcasters are not taking advantage of it.

To date, many broadcasters have been hesitant to ask users to register, wary of creating obstacles to listening. But data can inform ad sales, marketing and programming, prompting some broadcasters to offer exclusive content or contests in exchange for registration. Hubbard Broadcasting, for instance, offers “streaming rewards” for listeners who register and tune in on the digital stream. They can win prizes ranging from concert tickets to merchandise and services from radio advertisers. “Our alternative is to try and entice them with great features,” says director of digital strategy Jeremy Sinon.

In exchange, Sinon says Hubbard is building a valuable asset: metrics on who is listening to a stream, when and for how long. “It is the purest database we have. It is a database around listening,” he says.

For now, Hubbard staffers are analyzing the information in-house, and Sinon expects someday it will inform ad sales. Hubbard is involving clients in streaming rewards, either by featuring their products in giveaways or asking listeners to opt into a clients’ database. Says Sinon, “It gives us a new dimension for clients to get into the listening experience.” And with each such new dimension, there’s a chance the money will follow.